Friday, March 1, 2013

The Great Depression in 22 Western Nations: Real GDP Data

If I bring together all the data I have collected in previous posts, we can see the real GDP loss and the duration of the Great Depression for 22 Western nations, ranked from the most severe to the least severe real output loss:

The worst depressions were in Canada and the US, with Austria, Poland, Czechoslovakia, Germany, France and New Zealand following.

If we define a depression as a contraction of real output of 10% or more, technically only Canada, US, Austria, Poland, Czechoslovakia, Germany, France, New Zealand, the former Yugoslavia, and Bulgaria had depressions. Technically, all other nations had mild, moderate or very severe recessions (a recession is a real output loss of less than 10%).

The output loss was less severe in Scandinavia and South Eastern Europe.

Denmark and Finland had moderate recessions rather than depressions.

To escape the worst ravages of the depression, some Scandinavian nations left the gold standard quickly, devalued their currencies, stabilised their banking systems and implemented loose monetary policy, and perhaps some degree of fiscal stimulus (although the question whether the Scandinavian countries pursued fiscal expansion is disputed by some economists).

The UK left the gold standard and devalued its currency quickly, which allowed some degree of export-led growth, but unemployment was still shockingly high in the UK in the 1930s.

Those nations that recovered from the Great Depression or its aftermath rapidly and successfully were New Zealand, Germany and (although not a Western nation) Japan. They did so by large-scale fiscal stimulus. The US recovery was aided by moderate fiscal expansion, but not nearly enough to drive the economy to full employment.

More on the fiscal expansion in New Zealand, Germany and Japan is given in these posts: